Notes give insight into investigation of Horne

Handwritten notes from Arizona Attorney General Tom Horne's former criminal division chief appear to show Horne intervened to try to protect employee Kathleen Winn, the campaign-committee chairwoman he is accused of colluding with in violation of campaign-finance laws.

The 15 pages of notes from James Keppel, a former Maricopa County Superior Court judge, also appear to show that one top employee in Horne's office asked about hiding or destroying documents that implicated Winn in an unrelated internal investigation.

Keppel's notes were obtained during a 14-month investigation into Horne by the FBI and local authorities that culminated in Maricopa County Attorney Bill Montgomery announcing last week that his office would pursue a civil case against Horne and Winn. Documents show the case was also investigated as a potential criminal matter.

Winn chaired an independent expenditure committee on Horne's behalf during his 2010 race for attorney general. By law, candidates are not allowed to coordinate activities with independent expenditure committees.

The investigation was launched after a state investigator in Horne's office, Margaret "Meg" Hinchey, obtained evidence of what appeared to be collusion while investigating office media leaks at Horne's request.

Through a public-records request, The Republic last week acquired documents from the investigative file totaling nearly 300 pages. The documents show:

Horne and Winn called each other 150 times in the weeks leading up to the 2010 general election. The number and duration of the calls spiked between Oct. 20 and Oct. 28, when political consulting firm Lincoln Strategy Group was working with Winn's independent expenditure committee to create TV ads targeting Horne's Democratic opponent, Felecia Rotellini. In one case, Winn talked to Horne on the phone as she was e-mailing a political consultant at Lincoln about the ad.

Attorneys for Horne and Winn said Winn was advising him on a complicated real-estate transaction.

On Oct. 27, Brian Murray, a political consultant working with Winn on the anti-Rotellini TV ads, was so uncomfortable with Winn's contact with Horne that he notified an attorney for Lincoln. Murray wrote: "I warned her on numerous occasions that she needed to cease contact with the candidate and any agents of the campaign."

In a search-warrant affidavit, Maricopa County Attorney Investigations Division Commander Mark Stribling wrote that evidence showed that Horne and/or Winn may have broken the law in funding the committee from Aug. 25, 2010, through Nov. 2, 2010. He cited the state's criminal "fraudulent schemes and artifices" statute.

Deborrah Miller, a Horne campaign worker and Attorney General's Office employee, recalled that Winn visited Horne's campaign headquarters during the 2010 general election, while she was chairing the independent expenditure committee.

Horne's spokeswoman, Amy Rezzonico, sought "use immunity" from the County Attorney's Office in exchange for information she would provide to the FBI. Such immunity is typically used in criminal investigations. Her attorney sought to lay ground rules for investigators to interview her regarding Horne's campaign and the independent expenditure committee. It is unclear if the request was granted.

Horne has said the charges against him are "totally false." In an e-mail statement Friday, his office said the law permits candidates and people running independent expenditure committees to have contact "so long as there is no coordination or direction of the expenditure by the candidate, which there was not in this case. This will be completely proven to be true during the legal process." The episode "has not and will not interfere with the important work he is doing as Attorney General," the statement said.

Winn told The Republic she did nothing wrong. She said she was not interviewed during the investigation even though she's "the only one that knows what happened."

"I think that someone should ask the question: Why the FBI is following Tom Horne around on something that happened in 2010? ... What does that have to do with an alleged violation of campaign finance?" she said. "This isn't about me, this is about Tom Horne, and this is about sending a message to Tom Horne to not run for governor."

Winn said she wouldn't comment further until she receives Montgomery's formal charging document.

Winn created the independent expenditure committee, Business Leaders for Arizona, to raise money to oppose former Maricopa County Attorney Andrew Thomas, a Republican who was running against Horne in the 2010 primary. The committee raised large donations in late October 2010 as Horne and Rotellini were running neck and neck. The committee, headquartered at Winn's Mesa address, raised $512,500 in nine days to fund anti-Rotellini TV ads.

The records also show attorneys for Horne and Winn criticized the investigation.

Horne would not speak with investigators based on advice from his attorney, Michael Kimerer, who criticized the FBI's investigative tactics, saying investigators used "coercive and misleading interview techniques" and that they engaged in "unauthorized surveillance" of Horne.

Debus also hounded the County Attorney's Office over federal investigators' behavior and sent e-mails defending Winn's involvement in the committee. He questioned between February and August why a criminal probe was necessary for an alleged civil violation and challenged the scope of the investigation.

Keppel's notes

The notes from Keppel, a 44-year career prosecutor and judge, provide a window into the case against Horne and offer perspective on how Horne and his inner circle reacted to potential media leaks and the FBI investigation. Keppel declined to comment, but said his notes accurately reflect events.

He was interviewed by the FBI in February and abruptly resigned from the Attorney General's Office in March. He has told The Republic he resigned over the FBI investigation and the way some people within the Attorney General's Office responded to it.

His notes allege that Horne obstructed the internal investigation Horne instigated into potential leaks to the media. According to Keppel, Horne would not allow supervising special agent Hinchey to interview Winn.

Horne said if Winn were to be interviewed, he should do it, Keppel wrote. During one discussion, Horne's top staff asked what he would do if it was determined Winn was involved in the alleged leaks. Horne said, "I can't fire her. She can really hurt me." In another conversation, Horne reportedly said he didn't "want to upset" Winn, when Hinchey again asked to interview her.

Last December, the notes stated, Deputy Attorney General Eric "Rick" Bistrow, a longtime Horne ally and Horne's chief of staff, asked Keppel if Hinchey's internal notes could "be destroyed/removed" from her computer. When Keppel told him they might be public records and therefore could not be destroyed, Bistrow asked what Hinchey would say about it.

"I told him she would not do it," Keppel wrote.

Bistrow then asked if the records could be considered drafts, or placed in Winn's personnel file to prevent them from becoming public.

The next day, Bistrow in a meeting said the internal-leak probe needed to end and it appeared Winn was involved, but "We all know nothing will happen."

Bistrow has denied all allegations of illegal and unethical behavior. Bistrow has acknowledged he raised questions to Keppel as to whether the investigative file was a public record, whether they could be considered "drafts" and whether parts could be "excised" because the file contains "scandalous stuff" that could "hurt a lot of people."

A civil case

Federal and local investigators spent more than a year pursuing a criminal investigation into Horne and Winn, but when it came time to resolve the case, Montgomery, the county attorney, chose to bring civil charges against Horne and Winn.

During the investigation, Stribling and FBI Special Agents Brian Grehoski and Merv Mason used criminal investigative techniques to build a case against Horne and Winn, documents acquired by The Republic show.

Investigators put Horne, the state's top prosecutor, under surveillance, trailing him as he met a female assistant attorney general and drove together to her residence, where the FBI witnessed their involvement in a minor hit-and-run.

Through search warrants, investigators obtained personal e-mails between Horne and Winn. Through grand-jury subpoenas, investigators obtained a history of their phone calls, bank records and other information.

In the end, Montgomery said state criminal statutes don't specifically address the alleged coordination between Horne and Winn. Instead, Montgomery will pursue civil enforcement action, which could force Horne and Winn to repay an estimated $400,000 to contributors. If they refuse, Horne and Winn could be forced to pay penalties of more than $1 million.

Privately, some lawyers and prosecutors have criticized Montgomery for his decision to pursue civil action, saying the evidence clearly shows Horne and Winn attempted to defraud Arizona voters.

Asked why investigators would pursue a criminal track in the investigation if the case was based solely on a civil matter, Montgomery responded that there was no restriction on the scope of the investigation early on, and that the FBI followed leads wherever they went. "There was no way to know at the outset if the investigation would eventually encompass both civil and criminal conduct or only one or the other," Montgomery said in an e-mail.

Retired Maricopa County Superior Court Judge Kenneth Fields pointed out that prosecutors have wide discretion when determining what to charge. He said prosecutors pursue cases involving public officials cautiously and that Montgomery may have learned a lesson from his predecessor, former Maricopa County Attorney Andrew Thomas, whose political and legal careers were destroyed by his failed pursuit of corruption- and financial-related charges against public officials.

There may be other reasons, Fields said. "There may be some indication of criminal conduct, but not enough to seek a criminal indictment. Montgomery may just be making a decision that the case is not strong enough to proceed."

ASU law professor Zig Popko said political considerations may have partially influenced Montgomery's decision. Popko noted that a criminal case against Horne could last three to five years, which would run into the 2014 election cycle when Horne, a Republican, would be up for re-election. Montgomery, also a Republican, would be in the middle of a four-year term at that point and could be running for another office.

Popko added that Montgomery may have made his decision based on the "sensitivity of prosecuting a sitting attorney general." He said Horne could settle without admitting guilt.

Montgomery said politics had nothing to do with his charging decision.

"Political considerations have no place in my decision-making process when it comes to enforcing our laws, and they played no role whatsoever in this matter. Zip, nada," Montgomery said. "It has been my earnest intent to keep politics out of administering my responsibilities in the criminal justice system and to the same degree in civil matters."

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